Croda International’s profit slumps as sales take a hit

Croda International reported a slight decline in sales for 2024, with revenue falling one per cent at constant currency to £1.63bn.

Excluding Covid-19-related lipid sales from 2023, underlying sales rose two per cent, led by strong growth in the consumer care business.

Consumer care sales rose seven per cent at constant currency, driven by demand from local and regional customers and strong growth in fragrances & flavours.

Life sciences recorded a 14 per cent decline but returned to growth in the second half of the year, supported by a recovery in crop protection. Industrial specialities sales increased by two per cent.

The company’s profitability also took a hit, with adjusted operating profit down 8.2 per cent to £279.7m, as margins contracted to 17.2 per cent from 18.9 per cent.

The decline was attributed to the absence of high-margin Covid-19-related sales from 2023.

However, margins improved in the second half of the year as operational efficiencies and higher sales volumes began to take effect.

Free cash flow rose 9.4 per cent to £181.1m, supported by strong working capital management.

Net debt remained stable at £532.3m, with leverage standing at 1.4 times earnings. Despite lower earnings, Croda increased its dividend by 1 per cent to 110p per share.

Steve Foots, Croda International’s chief executive officer, said: “2024 was another transitional year, following two years of unprecedented demand in 2021 and 2022, with an industry-wide reset from 2023.

“Whilst sales growth was lower than we hoped in a subdued demand environment, proactive actions to rebase costs and drive efficiencies enabled us to deliver profits in line with our guidance.

“Our multi-year programme of actions to make Croda more focused and more efficient began to bear fruit with our adjusted operating margin improving half-on-half and strong free cash flow generation.

“We accelerated our efforts with an enhanced focus on costs and efficiency which, combined with increased innovation and the growth potential of recent investments, underpinned our confidence in delivering earnings growth and improving returns in the future.

For 2025, Croda said it expected the consumer care and life sciences arms to return to sales growth, while operational efficiencies were set to offset inflationary pressures and costs from strategic investments.

Croda International forecasted adjusted profit before tax to be between £265m and £295m at constant currency.